Nasdaq 100 Records 5-Month Winning Streak: Historical Patterns Predict The Next Moves

The Nasdaq 100 Index, represented by the Invesco QQQ Trust QQQ, has closed its fifth consecutive month in the green, bringing the year-to-date performance to 42%.

The current streak of five consecutive months of gains is a remarkable occurrence that has only been witnessed six times in the post-Lehman period, making it a significant event for investors and market watchers alike.

Analyzing the historical data reveals that in five out of the last six instances, the Nasdaq consistently delivered positive returns both three and six months after the end of its streak.

Furthermore, one-year returns have been consistently positive in all previous occasions, demonstrating the index’s ability to provide long-term value and reward patient investors who stay invested in the market.

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How Did The Nasdaq Perform After A 5-Month Winning Streak?

Over a three-month period, the average returns have been relatively modest, standing at 0.98%.

However, extending the investment horizon to six months leads to a significant surge in average returns, with the index delivering a solid 8.5% return.

Over a one-year period, the average returns have surged to a remarkable 22.8%. This demonstrates the potential for the technology sector to deliver substantial growth in the long-run, despite episodes of short-term volatility.

One of the most challenging periods for the Nasdaq was after it closed five consecutive months of gains from April to August 2018. The three-month return that followed this streak was particularly dismal, recording a decline of 9.2%. The return after six months was negative, falling by 7.3%, while the return after a year was barely in the green, with a slight increase of 1.6%.

The best three-month return after the end of the positive streak occurred between August and October 2009 (4%). The Nasdaq 100 Index saw remarkable returns following the positive streak between September 2019 and January 2020. The six-month return was an impressive 21.3%, while the one-year return reached a remarkable 43.8%.

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Nasdaq 100’s 5-Month Winning Streak Post 2008

Period	3m Return %	6m Return %	1y Return %
Mar-Jul 2009	4.00	8.6	16.3
Jan-May 2013	3.1	17	25.3
Nov 2016 – Mar 2017	3.9	10	21.1
Apr-Aug 2018	-9.2	-7.3	1.6
Sep 2019 – Jan 2020	0.1	21.3	43.8
Apr – Aug 2020	1.3	6.6	28.7
Average	0.98	8.52	22.77

Chart: Nasdaq 100 Index

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